An Exploratory Study on The Managerial Ownership and the Informativeness of Earnings in the Trading and Services Sector: An Evidence from Malaysia

Abstract

This study attempts to examine the relationship between managerial ownership with the informativeness of earnings in Malaysia. The informativeness of earnings is implied by the earnings' explanatory power for return. By using data from firms listed in the main board trading and services sector of Bursa Malaysia Berhad, the study found that at the level of 25%, managerial ownership has nonlinear relationship with the informativeness of earnings. The study also found that at the level of more than 25% managerial ownership, the firm size, risk and level of debt have inverse relationship with earnings. The finding perhaps offers another useful point to enhance understanding in the corporate governance practices in Malaysia.